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Moody's lowers Shelter Afrique
Moody's Investors Service said it downgraded the issuer rating of Shelter Afrique to Caa1 from B3 and assigned a negative outlook, concluding the review that began in February.
The downgrades reflect a view that Shelter Afrique's current liquidity crisis will result in an event of default under the agency's definition, coupled with its expectation that losses for private creditors will be minimal, Moody's said.
The negative outlook reflects a risk that losses for private creditors may prove to be higher than expected, the agency said.
Since Shelter Afrique's downgrade to B3 in February 2017, two developments have significantly altered the central expectations for the trajectory of the company's financial position, Moody's explained.
The first is that, despite initially promising commitments from shareholders, capital injections have not arrived in sufficient time to avoid an event of default occurring, the agency said.
Since the start of the year, Shelter Afrique has received $14 million in capital subscriptions from shareholders, comprised of an $8.2 million payment from the African Development Bank, $3.5 million from the Africa Reinsurance Corp. and $2.3 million from Cameroon, Moody's said.
A further $10 million payment from Kenya is reported by Shelter Afrique to be at an advanced stage, the agency added.
Shelter Afrique has so far received 28% of the $50 million pledged via commitment letters, Moody's said.
The capital subscriptions received so far are broadly in line with payment schedules indicated by shareholders, the agency said.,
But future contributions are not expected to arrive in time to prevent a default event, Moody's said.
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